VW says US sales tumble 25% in November
Decline due in large part to the fact that the company couldn’t sell any diesel-powered cars
For the first time, Volkswagen’s US sales were hit hard by the company’s dieselemissions scandal as dealers laboured for most of the month with relatively few cars on their lots that they could sell.
VW’s namesake brand saw deliveries decline by 25 per cent in large part because the company couldn’t sell any dieselpowered cars. The company admitted in September that it used software in its cars with small diesel engines to cheat on US emissions tests and stopped selling those cars. Last month, the company stopped delivering models with six-cylinder diesel engines, including the Porsche Cayenne, after allegations that they also used socalled defeat devices.
November is the first month that the scandal has seriously hurt US sales for the German carmaker, which used rebates and cheap lease deals to generate a 0.2 per cent sales increase in October.
Standard & Poor’s Corp. downgraded Volkswagen one step to BBB+ from A- Tuesday. The rating remains three levels above non-investment grade.
“We see a tarnished reputation and brand image, reduced business prospects, a more challenging competitive position, substantial costs, and weaker leverage metrics,” S&P wrote in a statement.
Volkswagen’s American depositary receipts fell 1 per cent to $29.49 (Dh108.23). They have tumbled 32 per cent this year through Tuesday.
The automaker is trying to boost production of the gasoline-powered cars that it is allowed to sell, but it didn’t increase shipments to dealers until the middle of the month.
“I had more cars that I can’t sell parked in the back lot than I had in the front lot for sale,” said Alan Brown, who co-owns two VW dealerships in the Dallas area and is chairman of the brand’s US dealer council. “The factory is still trying to reset production to gasoline cars and that can take three or four months to get inventory in.”
Brown said he started the month at one of his stores with just 38 saleable new cars on the lot, about a third of what he would like. VW got more cars to dealers about November 18, but it takes at least a week to prepare the cars for sale and advertise them, he said. He now has 135 vehicles and thinks sales will return to normal levels this month.
Loyalty tested
VW has loyal customers, said Karl Brauer, senior analyst with Kelley Blue Book Co, an automotive research firm in Irvine, California. But buyers may be staying away because they can’t purchase the diesel cars that are core to its brand.
“Volkswagen was able to hold off a big decline in sales for a month or two by using discounts but it caught up to them,” Brauer said. “Their sales fell 25 per cent and diesel was usually that much of their sales.”
It was the wrong month to run low on inventory. Some people may see the emissions crisis as the time to get a deal, but couldn’t find what they wanted, said Jessica Caldwell, an analyst with automotive pricing website Edmunds.com. Others may be avoiding the brand until they see how the company responds to the problem.
Volkswagen submitted its recall plan for the 4-cylinder diesel models to the California Air Resources Board and federal regulators on November 20.